February 1, 2011, 12:00 AM

Going beyond payment cards to drive online sales

Alternative forms of online payment will slowly gain on credit and debit cards, predicts Javelin Strategy and Research.

Retailers can expect consumers will shop more online in the coming years, reaching $443 billion in online purchases by 2015, but merchants will have to accept many forms of payment to fully share in this growth, Javelin Strategy & Research suggests in a recent study, "2010 Online Retail Payments Update and Forecast: Shift in Consumer Payment Behavior—A Temporary Reaction or a New Reality?" Major credit cards, debit cards and store-branded cards collectively will account for 70% of online payment volume by 2015, down from 75% in 2010, the study predicts. At the same time, the combined payment methods of gift cards, prepaid cards and alternative payments (including PayPal, Bill Me Later, Google Checkout, Checkout by Amazon and eBillme) will rise to 30% of e-payment volume from 25%. Consumers may prefer certain of those alternative payment types for high-ticket purchases, Javelin says. While only 1% of consumers surveyed had tried Bill Me Later, it accounted for 9% of merchants’ sales made with alternative payment methods.


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